For Immediate Release: Tuesday, December 26, 2017
Statement of Montgomery County Councilmember Marc Elrich on Bill that Gives County Residents the Option to Prepay their Property Taxes
ROCKVILLE, Md., Dec. 26, 2017—Today the Montgomery County Council passed Bill 42-17, Property Tax Advance Payment — Authorized, which allows county residents to pay their property taxes in advance.
Councilmember Elrich’s full statement on today’s vote is below:
The Montgomery County Council held a special session today at which it passed expedited legislation to allow County taxpayers to pre-pay their estimated 2018 property taxes, which might allow them to take a larger itemized deduction in 2017. State and local tax (SALT) deductions are capped at $10,000 starting in 2018 by the tax bill passed by Congress in December. Expedited Bill 42-17, Property Tax – Advance Payment – Authorized, will authorize the advance payment of County property taxes. The bill was introduced in response to the recently-enacted federal tax reform act, which will have disproportionately negative impacts on jurisdictions like ours. While some jurisdictions in Maryland already have laws on the books allowing their residents to pre-pay property taxes, Montgomery County did not. That is why the Council felt it important to convene a special session to consider authorizing the pre-payment option. By creating this prepayment option, it is the Council’s hope that it will make it possible for residents in the County to get a final year of benefit from deducting their property taxes.
Like the rest of the country, we didn’t know what the final federal tax bill included until the day before they passed it. We had no requests to my office from anyone to do something about the possible impact of this tax bill in advance of Congress’s final vote, since there was no clarity on what they would do. Initial versions only limited income tax deductions, not property tax.
I believe it was important for us to meet this week to consider it, and in the end, I did support the legislation. But I did not do so without questions and, frankly, reservations about the execution of this bill and its financial implications for the County. My concern is how this impacts our next budget. The council didn’t really address how it would accommodate shortfalls in the coming budget because of passage of this bill, particularly as it relates to public services like health care, libraries, public safety, class size, etc. We continue to have no concrete information, or even estimates, of what the potential budget impacts will be. We have no way of knowing how many of our taxpayers will know of the option to pay early and then will have both the time and the resources on hand to do so before the end of the year.
Comments by some proponents that this action will have no impact on the coming budget are simply not true. It is not possible to do this without some impact on the County budget, and to say that there will be no impact is inaccurate and disingenuous. Larger deductions reduce taxable income resulting in reduced tax revenue for County services. If it truly had no impact, I would have no reason to question it at all. But it’s my job to ask the tough questions, to both help our residents, and understand the implication for the County over all. I have a dual responsibility to not just help those people eligible to pre-pay, but also be sure that the people who rely on County services are not harmed by what we did here today.
I supported this legislation because I believe we have the means to not cause harm in our budget, and I’m going to insist that the council not allow this action to cause greater harm to residents, including the majority of County residents who are not eligible for this prepayment. That includes our residents living in rental units, for example, as well as anyone technically eligible who does not have the cash on hand at the end of the year to prepay their 2018 property taxes, which I imagine includes many, if not the majority, of those eligible.
If residents believe that they might benefit from paying their 2018 property tax early, as authorized by this law, the Council highly recommends that they carefully consult the information on the County Finance Department’s website, as well as consulting their tax professional. We are not offering tax advice.
If residents opt to pre-pay their 2018 property taxes in accordance with the legislation we passed today, they will need to act right away to do so, and will need to do so carefully, in accordance with the methods detailed by the Department of Finance. Precise information on how to do so can be found here. The advance payment should be calculated by applying the current County property tax rate to the assessment of the taxpayer’s property for the prior year. The pre-payment must be postmarked by midnight December 31, which falls on a Sunday, so realistically it will need to be postmarked by Saturday evening, December 30, and residents must include a signed copy of a Notice of Intent of Prepayment. The Finance website also includes a checklist to help ensure residents have not missed any steps. The law requires Montgomery County to refund any amount paid that is greater than the property tax owed and would permit the County to bill the property owner for any amount of the advance payment that is less than the real property tax finally determined.
The impact of the federal tax plan for many residents is real and I hope that what the council has done today can minimize the pain that the federal tax plan will inflict on them while holding harmless the County budget and the County residents who depend on services provided by County government.
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Release ID: 17-400